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Sterling weakened after the Monetary Policy Committee surprised economists who were expecting a "hawkish hold" on policy, by cutting its forecasts for near-term growth in the United Kingdom economy and for inflation. ING Groep NV's currency strategist Viraj Patel said sterling is "clinging on to a hawkish BOE".

The pound had slid sharply earlier in the day after the BoE kept rates on hold and cut its economic growth and inflation forecasts.

However, depending on the voting pattern, the pound could rally more than 2 percent or fall 1.4 percent from around $1.3545 now, according to ING.

Since he joined the BoE in 2013, Carney has signaled several times that the time was nearing for rates to rise from the historic low of 0.5 percent they reached during the 2008-09 financial crisis, only for economic data to go the wrong way.

A "subtle hawkish surprise" would be a 6-3 split, which will support speculation of an August hike, Patel said.

The rate was further lowered by 25 basis points in the wake of the Brexit vote in the summer of 2016 and was raised back to 0.5 percent at the end of past year.

For Patel, sterling at $1.35 "looks overcooked relative to the more tempered BOE policy rate expectations". That was another disappointing economic occurrence right before the BOE meeting.

They said that no progress has been made in the economy, so no rate hikes this time. The MPC voted 7-2 to hold the rate steady, as predicted by all but three of 54 economists in a Bloomberg survey.

The Bank of England viewed that that the economy might move into a state of excess demand in early 2020.

"We think the momentum in the economy is going to reassert", he told reporters in London.

Kevin Doran, chief investment officer at AJ Bell, said: "In a world where other central banks are seeking to normalise their rates, the combination of slow growth and Brexit uncertainty must surely be raising some concerns about the size of the current account deficit".

"With rates still rooted at emergency levels, this is one of the challenges faced by the Bank and how it chooses to deal with this will be key to the success of the United Kingdom economy in coming years".

Households will have longer to sort out their finances before an increase in borrowing costs after the Bank of England yesterday chose to hold interest rates.

The two rate-setters who opted for an immediate quarter-point increase noted that unemployment is at its lowest level since 1975 and wages are growing, which could push up inflation.

Inflation was seen dropping to 2.1 percent in a year's time, and returning to target a year later, but only if interest rates rose by 25 basis points about three times over three years, as markets expect.

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